By Moses Mbaiorga
In the last quarter of 2022, President Muhammad Buhari directed the governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, to announce the resolve to redesign the already existing 200, 500 and 1000 naira notes and determine when the old notes will cease to be legal tender.
The CBN governor, while making the announcement stated that, new notes will be launched on November 23, 2023 and on December 15, 2022; the redesigned notes shall be released for immediate use along with the old notes. However, the old notes of 200, 500 and 1000 will cease to be legal tender on January 31, 2023.
According to the CBN boss, the policy was aimed at reducing the proportion of currency outside of banks; enhancing economic growth, development and sanity as well as help tame insecurity and raise a stop banner on the path of politicians planning to find their way to power through vote buying.
This was also confirmed by President Muhammadu Buhari in his broadcast to the nation on Thursday. “Let me re-assure Nigerians that strengthening our economy, enhancing security and blockage of leakages associated with illicit financial flows remain top priority of our administration. And I shall remain committed to my oath of protecting and advancing the interest of Nigerians and the nation, at all times.
“There is need to restore the statutory ability of the CBN to keep a firm control over money in circulation. In 2015 when this administration commenced its first term, Currency-in-Circulation was only N1.4trillion. The proportion of currency outside banks grew from 78% in 2015 to 85% in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system thereby distorting the financial policy and efficient management of inflation;
“The huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth; economic growth projections make it imperative for government to aim at expanding financial inclusion in the country by reducing the number of the unbanked population;
“Given the prevailing security situation across the country, which keeps improving, it also becomes compelling for government to deepen its continuing support for security agencies to successfully combat banditry and ransom-taking in Nigeria”.
Nevertheless, this monetary policy came as a surprise to many Nigerians including the political and bourgeoisie class as they began to wonder and question what has prompted the impromptu initiation of the policy; what it wants to achieve and how efficient it will be implemented within the short timeframe.
The National Assembly also summoned the CBN governor at different intervals demanding more explanation over the policy and why he did not contact the masses through them before coming up with the issue. They advised him amongst other things to extend the deadline to create room for more awareness and collaborations that would enhance effective implementation, especially in rural communities where there are no banks and many are without bank accounts.
In spite the concerns raised by the National Assembly, Mr Emefiele refused to extend the already scheduled deadline of January 31, 2023. According to him, the time was enough for anyone with legitimate monies to deposit in his or her bank account and that the awareness about new notes had already reached every nook and cranny of the nation. He further assured that the new notes will be enough in circulation even before the January 31 deadline.
However, it became apparently impossible to cease the old notes above 100 naira being legal tender on January 31, 2023 as proposed due to the fact that the new notes were not made available to citizens. Thus, the deadline was extended to February 10, 2023 following grave complaints by the public so much that, the governors of Kaduna, Kogi and Zamfera States, His Excellencies, Yahaya Bello, Nasil Elrufai and Matawale reportedly took CBN and federal government to Supreme Court, demanding an injunction restraining them from enforcing the February 10 deadline.
Without much ado, the Supreme Court ordered that CBN and the federal government should allow old and new notes to concurrently serve as legal tender pending hearing of the matter but CBN insisted on its earlier decision.
The case was due for hearing at the Apex Court on February 15, 2023 but was later adjourned to February 22, 2023. The Supreme Court has however, asked the parties involved to abide by its earlier order as more states have joined the law suit.
As the drama unfolds, conflicting reports kept trending, especially towards expiration of the extended February 10 deadline. The Supreme Court says the three old notes of 200, 500 and 1000 should remain legal tender while CBN and President Muhammad Buhari said otherwise.
State governors including that of Lagos, Kanu and Zamfera alledgedly ordered for the arrest of anyone who rejects old notes in their states while some individuals and business firms were collecting old notes. The opposite was the case with others.
Pressure continued to mount on the CBN governor and President Muhammad Buhari as the masses continued to wallow in abject depression and frustration at commercial banks premises and few operational Point Of Sales, POS joints to deposit old notes and withdraw money, respectively, despite the exorbitant charges. This was confirmed by the president during his recent broadcast.
“I am not unaware of the obstacles placed on the path of innocent Nigerians by unscrupulous officials in the banking industry, entrusted with the process of implementation of the new monetary policy. I am deeply pained and sincerely sympathise with you all, over these unintended outcomes”.
Following what was perceived by CBN as non-compliance by commercial banks towards facilitating smooth implementation of the policy, President Muhammad Buhari in a broadcast on “The Challenges of the Currency Swap and State of the Nation” on Thursday extended the use and recirculation of old 200 Naira note to April 10, 2023.
Despite the extension, most Nigerians are not convinced that the policy would achieve the expected outcome and believe the poor masses are still at the receiving end. It was optimistic that those who are hoarding old notes in large quantities as CBN claimed will still find their way out to swap a good percentage of it with the new notes. Already, CBN has made several arrests in this regard and equally vowed to punish the culprits appropriately.
However, President Muhammad Buhari in a broadcast named unprecedented achievements recorded by CBN through the seemingly not-well-planned currency swap policy. According to him, ” I have been reliably informed that since the commencement of this programme, about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved. This represents about 80% of such funds. In the short to medium and long terms, therefore, it is expected that there would be:
“A strengthening of our macroeconomic parameters; Reduction of broad money supply leading to a deceleration of the velocity of money in the economy which should result in less pressures on domestic prices; Lowering of Inflation as a result of the accompanying decline in money supply that will slow the pace of inflation; Collapse of illegal economic activities which would help to stem corruption and acquisition of money through illegal ways; Exchange Rate stability; Availability of Easy Loans and lowering of interest rates; and greater visibility and transparency of our financial actions translating to efficient enforcement of our anti- money laundering legislations.
He also added that the policy would help conduct free, fair and credible elections as it has affected moneybag politicians who are planning to buy votes.
“Fellow citizens, on the 25th of February, 2023, the nation would be electing a new President and National Assembly members. I am aware that this new monetary policy has also contributed immensely to the minimization of the influence of money in politics.
“This is a positive departure from the past and represents a bold legacy step by this administration towards laying a strong foundation for free and fair elections”
The policy has indeed come with a lot of dysfunctional effects especially as the price of Premium Motor Spirit (PMS) has also skyrocketed in recent weeks.
The money regarded as legal tender in circulation now is grossly inadequate and cannot satisfy the basic needs of the people. Cashless transaction is not working effectively and at all times to complement bank efforts. People are visibly stranded, hungry and angry. Businesses have crumbled. Most shops have closed or hardly make reasonable sales amongst other difficulties.
Some aggrieved customers have allegedly burnt three banks in Delta State which is an indication that citizens are angry having suffered enough and are no longer seeing the positive impacts of the high-rated currency swap policy.
Presently, most people still have old 500 and 1000 naira notes and cannot take them to CBN branches in their states as directed because of logistics issues. CBN and President Muhammad Buhari should therefore, shift ground and allow the now banned notes to regain legal tender status concurrently with other ones and then set a longer deadline, else, people are indeed suffering and if the situation remain unchanged, it may threaten the success of the forthcoming general elections.